Insurance can't prevent a disaster, but understanding how it works can help make recovery a little easier. Follow these steps to make the claims process as painless as possible.
Take an Inventory of Your Property
- Take photos or videos of your home before a disaster strikes to properly record its condition. Use a digital camera, and be sure to create back-up copies of the images that are stored in the cloud or other off-site location.
- Make a detailed list of your personal property, such as clothes, jewelry, furniture, computers and audio/video equipment. Photos and video of your home, as well as sales receipts and the model and serial numbers of items, will make filing a claim simpler. Store the inventory in a safe location, and also ask a friend or family member to keep a copy of the inventory for you. Keep an electronic copy of the inventory as well.
- Add insurance information to your inventory information — the name of your company and agent, policy number and contact information.
- Move all of your important documents to a safe location. Take them with you when you evacuate or store them in a safe deposit box outside the area.
Review Your Insurance Coverage
Review your insurance coverage. What does your insurance policy cover? What does it exclude?
- The standard homeowners insurance policy does not cover flood damage. Think you're not at risk just because you've never experienced flooding before? Think again. Learn more about your flooding risk and flood insurance at floodsmart.gov.
- Find out if your policy covers additional living expenses to reimburse you for the cost of living in a temporary residence if you are unable to live in your home.
- If you have jewelry or collectibles, check the limits of coverage. You may want to buy more coverage for these items.
- What is your deductible? You will have to pay at least this much if you have a covered loss.
- Understand the difference between replacement cost and actual cash value.
- Replacement cost value: If the cost to repair the property is greater than the cost to replace the property, the insurance company will reimburse you the dollar amount needed to replace the damaged property with something of like kind and quality. For example, if you own a five-year-old lawn mower that is destroyed by a fire, the company will reimburse you with an amount to purchase a new, similar lawn mower, minus your deductible.
- Actual cash value: If the cost to repair the property is greater than the actual cash value of the property, the insurance company will reimburse you the dollar amount to replace the property minus the amount of accumulated depreciation. For example, if that same five-year-old mower was destroyed, and the average lawn mower lasts 10 years, the company will only reimburse you for half (10 years minus five years) the cost of the item, minus your deductible.
After Disaster Strikes
- File your claim as soon as possible. Call your insurance company or agent with your policy number and other relevant information. Your policy may require that you make the notification within a certain time frame.
- Cooperate fully with the insurance company. Ask what documents, forms and data you will need to file a claim. Incorrect or incomplete information will only cause a delay in processing your claim. Keep a diary of all conversations with insurance companies, creditors or relief agencies.
- If your home is damaged to the extent that you can't live there, ask your insurance company if you have coverage for additional living expenses.
- Take photographs/video of the damage.
- Make the repairs necessary to prevent further damage to your property (cover broken windows, leaking roofs and damaged walls). Don't have permanent repairs made until your insurance company has inspected the property and you have reached an agreement on the cost of repairs. Be prepared to provide the claims adjuster with records of any improvements you made prior to the damage.
- Maintain any damaged personal property for the adjuster to inspect.
- Ask the adjuster for an itemized explanation of the claim settlement offer.
- Save all receipts, including those from the temporary repairs covered by your insurance policy.
- When hiring someone to handle repairs:
- Be wary of contractors who demand upfront payment before work is initiated or payment in full before work is completed. If the contractor needs payment to buy supplies, go with the contractor and pay the supplier directly.
- Get more than one bid. Ask for at least three references. Check with the Better Business Bureau about the contractor. Ask for proof of necessary licenses, building permits, insurance, and bonding. Record the license plate number and driver's license number of the contractor.
- If there is a disagreement about a claim, ask the company for the specific language in the policy in question and determine why you and the company interpret your policy differently.
- If the first offer made by an insurance company does not meet your expectations, be prepared to negotiate to get a fair settlement.
If you believe you have been treated unfairly in getting a claim paid, please contact your state insurance department.